Deutsche Bank nears £210m Merry Hill shopping centre CMBS closure
By James Wallace - Wednesday, February 01, 2012 15:00
Deutsche Bank will imminently close the £210m single loan Merry Hill commercial mortgage-backed securitisation (CMBS), in a deal sold on both sides of the Atlantic, CoStar News can reveal.
http://www.costar.co.uk/en/assets/news/2012/January/Deustche-Bank-nears-210m-Merry-Hill-shopping-centre-CMBS-closure/
CoStar News understands that the CMBS loan has three tranches: a circa £145m AAA tranche; a circa £30m AA+ tranche; and a circa £35m A+ tranche, rated by Standard & Poor's and DBRS. There is no Class X note in the transaction, because there is no excess spread in the deal.
The loan, which has a circa 50% LTV, is a refinancing of a previous DECO 12 CMBS loan, secured by first ranking shares in UK property finance company, QIC Finance, set up by underlying borrower, Queensland Investment Corporation, to hold its 50% stake.
The planned CMBS deal was first reported by CoStar News on December 8.
Deutsche Bank refinanced the loan early last summer on a five-year term, at a margin of between 200 to 225 basis points, CoStar News understands.
The absence of a securing mortgage was the trigger for the capital markets execution, with pfandbrief banks unable to buy share-secured debt while the debt funds were not interested in the paper through syndication.
The new issuance also follows the closure of Tesco's £450m credit-linked CMBS, secured by 11 UK supermarkets owned in a 50:50 joint venture between the retail giant and Trinity College, which CoStar News revealed last week.
Fitch Rating is not on the deal because it has not changed its new legal requirements introduced ahead of Deutsche Bank's £302m CMBS, secured by Blackstone's Chiswick Park, which closed last June.
The Merry Hill loan is secured against the 50% stake held by QIC, the Australian government-backed global fund manager, which Westfield sold it to for £524m in February 2007.
In case of loan default, debt investors would have no power of sale but instead would have the right to the QIC partnership interest. However, the low leverage mitigates the threat of an LTV breach, sources familiar with the deal suggest.
The £210m loan to QIC, Australia's government-owned fund manager, was refinanced over the summer after it was extracted from Deutsche Bank's £672.9m DECO 12 CMBS.
Deutsche Bank had originally earmarked the loan as part of a three-loan CMBS, along with the £145m loan secured by MEPC's Milton Park, the Oxfordshire business park, and a loan secured by Marcol Group's Design Centre in Chelsea Harbour. However, the exacerbation of the eurozone debt crisis in the summer deteriorated sentiment prompting the bank to shelve the ambitious plans.
Merry Hill consists of a 220-acre mixed-use complex, including the 1.5m sq ft shopping centre, with more than 250 stores and anchored by Debenhams, Marks & Spencer, Sainsbury's and Asda, as well as the nearby Waterfront, which consists of offices, restaurants and bars. Merry Hill is 10 miles west of Birmingham and five miles south of Dudley.
Deutsche Bank declined to comment.
jwallace@costar.co.uk
http://www.costar.co.uk/en/assets/news/2012/January/Deustche-Bank-nears-210m-Merry-Hill-shopping-centre-CMBS-closure/
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